By Chris Weston

While Bitcoin gets the headlines for its red-hot form, gold heads in the opposite direction, with the heat coming out of the gold market, driven by a solid flush out of extended long positions, resulting in the yellow metal trading from $2790 to $2589.

After a period where the gold market was little troubled by higher US Treasury yields and a stronger USD, these historically significant drivers of the gold price have once again begun to bite and forced an overcrowded position to take some chips off the table.

Gold bulls have enjoyed a solid run all year, and won’t be giving up on their core position, likely believing this 6% pullback is just a pullback in a longer-term bull market. They will also be enthused by the defence of the October low of $2605, knowing that a close through this support level would be technically significant and would increase the prospect of a more protracted drawdown towards $2541 (100-day MA) and $2415 (38.2% retracement of the October 2023 to October 2024 rally).

So, the bulls will naturally want to see the upside build and ideally want a pushback above $2710 to feel this drawdown is over and we can see a more positive trend develop.

I remain unconvinced that the selloff is over though, and sit in the camp that the path of least resistance for the USD and US Treasury yields are higher – so my conviction to position long of gold here is low, and should we see a move below $2605, then I would look structure positions in gold for a renewed push lower.

• Weston Head of Research at Pepperstone